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📅 Tuesday, 21st October 2025
9:30 AM – 3:00 PM (UK Time)
📍 Central London
🎯 Exclusive for Mortgage Brokers
📊 AI Tools & Strategies for Brokers

Should You Make Mortgage Overpayments?

By c-admin

Video Breakdown

0:00 – introduction

0:25 – What is a mortgage overpayment

1:13 – When is the best time to overpay

1:52 – When you should overpay

2:42 – Get advice

3:15 – Summery

Video Transcript

What exactly is a mortgage overpayment?

A mortgage overpayment is when you pay more than your agreed monthly mortgage payment. For example, if you’re in a two-year deal and your standard payment is £1,000 per month, any amount you pay above that is considered an overpayment.

Why would someone want to overpay their mortgage?

Mortgages are long-term loans, often set for 25–30 years. Over that time, you end up paying a large amount of interest. By making overpayments, you can reduce the total interest paid and sometimes even shorten your mortgage term — for example, cutting a 30-year mortgage down to 20 years.

When is the best time to make overpayments?

Most banks allow you to pay up to 10% of your loan balance per year without penalties. For example, if your balance is £200,000, you can usually overpay up to £20,000 in a year without extra charges.

Currently, with interest rates around 5–6%, even if your bank charges a small penalty of 1–2%, overpaying may still save you money overall.

When should someone avoid overpaying their mortgage?

There are a few situations where overpaying may not be the best option:

  • High-interest debts: If you have other debts like credit cards charging 20% interest, it makes more sense to clear those first.
  • Large penalties: If the penalty for overpaying is higher than the interest you’d save, it isn’t worthwhile.
  • Better opportunities elsewhere: If you can earn more from investing your money than you’d save by overpaying, you may want to invest instead.

If someone is unsure, how should they decide?

Overpayments can be beneficial, but the right decision depends on your personal circumstances. There’s no one-size-fits-all answer. That’s why it’s always best to get professional mortgage advice before deciding.

Key Takeaway

You should avoid overpaying if:

  • You have other high-interest debts.
  • You don’t have an emergency fund.
  • You have better investment opportunities.

And if you’re unsure, consult a mortgage adviser — because everyone’s situation is different.